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House GOP largely backing Louisiana governor's budget plan

BATON ROUGE — House Republican leaders Thursday started advancing a budget plan that largely mirrors Democratic Gov. John Bel Edwards' proposal to use federal coronavirus aid to close a $1 billion gap caused by the pandemic without deeply slashing state services.

The House Appropriations Committee rewrote the package of budget measures to account for state tax and fee dollars lost because of the virus outbreak. The bills would rebalance this year's budget without cuts and would craft spending plans for the upcoming 2020-21 year with only modest reductions.

Lawmakers on the House Appropriations Committee read through budget documents on Thursday, May 21, 2020, in Baton Rouge. The committee advanced a package of bills to close a $1 billion state budget gap, largely in line with plans recommended by Gov. John Bel Edwards.(Photo: Melinda Deslatte/AP)

The committee sent those to the full House for debate without objection, a rare moment of bipartisan financial agreement.

In the upcoming budget year that starts July 1, the TOPS college tuition program, the K-12 school financing formula and the social services department would be spared reductions. College campuses, health programs and some other state agencies would take some cuts.

Spending increases that Edwards and many lawmakers wanted for teacher pay, public colleges and early learning programs have been stripped from next year's budget because Louisiana can no longer afford them.

“Overall, the plan balances need for some reductions while maximizing the use of federal recovery dollars,” said Appropriations Chairman Jerome “Zee” Zeringue, a Houma Republican.

Fears that the virus's hit to the state treasury would force steep slashing across programs don't play out under the proposal. The bills would use nearly $1.2 billion in federal assistance approved by Congress to respond to the pandemic and about $90 million from the rainy day fund to fill most shortfalls across the current and next budget years.

"This seems like very good news," said Rep. Gary Carter, a New Orleans Democrat. “We were expecting some drastic measures that may have to be taken in the budget. I’m just so pleased.”

Commissioner of Administration Jay Dardenne, the governor's chief financial adviser, said the more than $30 billion House budget plan for the upcoming year that begins July 1 differs from Edwards' proposal by only about $12 million in state financing.

“We agree on a lot more than we disagree,” Dardenne said.

One significant point of budget disagreement emerged later Thursday, however, about how to spend $800 million in federal coronavirus aid that Edwards has earmarked for local government agencies. The committee proposed in separate legislation to carve out $200 million for small business aid and create a different process for sending the remaining $600 million to local agencies than the governor has set up.

Louisiana’s tax collections are being hammered by widespread unemployment and shuttered businesses from the virus outbreak and a resulting steep dive in oil prices worsened by an international feud.

The full House will debate the package of budget bills Tuesday. If approved there, they'll move next to the Senate for consideration. The regular legislative session must end June 1, and legislative leaders have questioned whether they’ll complete the budget work by then or wrap it up in a special session.

Some Republicans expressed concern about how the state will replace the one-time use of federal aid in future budget years if Louisiana's tax collections don't rebound quickly to fill the gap when the federal assistance disappears. State economists have warned that Louisiana’s economic recovery could be slow.

The proposal to balance this year’s budget and craft next year’s spending plan uses nearly $1 billion in direct federal aid Louisiana received from Congress through the CARES Act to respond to COVID-19. The dollars can be spent on virus-related expenses, and the Edwards administration said it found expenses across multiple agencies that meet the criteria.

“Are you guys pretty confident we’re on solid ground with the use of the CARES Act money?” Republican Rep. Tony Bacala of Prairieville asked Dardenne.

Dardenne replied: “We feel confident that we are staying within the guardrails" given by federal officials.

To lower state costs, the budget also uses $190 million in increased federal Medicaid financing that Louisiana, like other states, received because of the coronavirus.

The budget for the financial year starting July 1 would include a $40 million state financing cut to the Health Department, a $22 million cut to higher education and smaller cuts to other agencies. House lawmakers added language blocking the Health Department from using a new reimbursement model for hospitals that provide Medicaid services, amid a disagreement over the approach.